BBVA suggests institutional certainty to Mexico and protect the USMCA before the US election.

Mexico must generate institutional certainty and protect the treaty with the United States and Canada (T-MEC) regardless of the result of the US presidential elections in November, considered this Tuesday Carlos Serrano, chief economist of the BBVA Mexico.

“Mexico has to be prepared to protect the treaty no matter who wins in the United States“, he noted when participating in the ‘Analysis and perspectives table. Elections 2024′, organized by the Institutional Stock Exchange (Biva).

Serrano indicated that to achieve certainty, a clear signal is necessary that Mexico does not violate the T-MECas this “could put you in a bad position regarding the review” in 2026.

The BBVA economist pointed out that Washington has not requested a panel on energy controversies, although he criticized “a bad policy” of Mexico the division of the electricity market, in which the state company Compañía Federal de Electricidad (CFE) must have at least 54% of the participation in generation.

“That would have to be reviewed because the United States has been very patient, it has not called a panel, but eventually that could create a problem for us and above all a problem for the review”, he expressed.

Serrano pointed out that secondly, Mexico’s institutions must be taken care of, as he stated that the T-MEC It rests on countries having clear rules and institutions that protect investors.

In this sense, he pointed out that the nervousness seen after the June 2 elections is related to the concentration of power by the ruling party, with ‘supermajorities’ in Congress that would allow it to reform the Constitution without negotiating with the opposition.

“I do not necessarily believe that the fact that there has been such a large majority is what worries the markets, what worries them is the possibility of reforms that could deteriorate the institutional framework in Mexico, imply a democratic regression and that could erode the counterweights“, he claimed.

Finally, the economist explained that the Mexican Government must be “very strategic” in its trade relationship with China so as not to violate the USMCA in the face of the trade war with the Asian country, which has also pushed Mexico to be its main trading partner.

He explained that the United States does not want Mexico and other countries to be used as a platform for products of Chinese origin to enter, which is why it requested a balance between imports and compliance with the rules of origin included in the treaty.

“What Mexico has to do is continue importing from China, because that makes both Mexico and the United States competitive, but strictly ensure that the rules of origin are respected so that there is no perception that China may be using Mexico as a platform to turn the rules around”, he concluded.